Agencies For Disabled In Disarray / State slow to respond to mismanagement,fiscal woes

Edward W. Lempinen, Reynolds Holding, Chronicle Staff Writers

Published
4:00 am PDT, Monday, August 4, 1997

The sprawling bureaucracy that controls more than $1 billion a year for developmentally disabled Californians is plagued by mismanagement and financial abuses so severe that the health and safety of the disabled have been

More than 100 interviews and thousands of pages of audits, state reports and court documents revealed that some of the centers have been linked to embezzlement, fraud and unethical financial deals. The Oakland-based Regional Center of the East Bay -- one of the most troubled agencies in the

system -- has in recent years lost hundreds of thousands of

dollars from theft, missing checks and undocumented loans.

Meanwhile, hundreds of children and adults with varying degrees

of mental retardation, autism and cerebral palsy have received

inadequate services -- or no services at all -- though the

state and federal governments have increased regional center

budgets by millions of dollars a year.

Problems have grown so severe at several regional centers that parents, center social workers and providers of housing and training to the disabled

Within a decade, though, state legislators were hearing that the system had lost sight of its mission. In reports and audits submitted to the Legislature in 1976 and in 1988, investigators cited a pattern of problems: abuses of power,

high turnover among social workers, poor accounting practices and chronic budget deficits.

The problems persisted into the 1990s, with many regional centers blaming their failures on a lack of funds. New clients were more severely disabled

and needed increasingly sophisticated and expensive services, the centers said.

But since 1990, the system's budget has grown twice as fast as the disabled population in the community.

And thousands of pages of documents obtained from the department

under the California Public Records Act suggest that mismanagement

-- not tight money -- accounts for financial breakdowns at

several regional centers. At the same time, critics say, the

state's oversight has been so weak that neither the Department

of Developmental Services nor the centers can track how the

money was spent, or whether it was spent wisely.

At the Regional Center of the East Bay, years of administrative chaos

culminated in 1987 with the replacement of top managers. But

the center has made little progress since in correcting management

troubles that have ranged from the absurd to the criminal.

In 1988, the state auditor reported thousands of dollars in

missing deposits, undocumented loans and unrecorded expenses.

From 1990 through 1994, the center failed to perform required

audits. Accountants hired in 1995 to do the work found bookkeeping

so careless that they refused to certify the financial statements

for fiscal years 1990 through 1993.

In 1994, the center's controller was fired for failing to have the audits done, says Kathryn Munn, the executive director of the center since 1989.

According to internal department documents, management later

discovered he had also taken at least $7,000 in center funds.

He avoided prosecution for embezzlement after agreeing to repay

the money.

But the problems apparently extended beyond the controller. A photocopy of a center check was cashed illegally for more than $36,000 in 1994. Police reports say that almost $1,000 was stolen from an office drawer in 1993.

"I know

of people who stole thousands and thousands of dollars," said

one source familiar with center operations. "You could easily

write a check to yourself, and there were people who did it

all the time."

The state forced the center to accept closer monitoring in 1995 and then put it on probation last year, one of the final steps before repeal of the center's contract.

According to a report issued in January, auditors discovered

hundreds of thousands of dollars in unpaid and undocumented

loans to service providers. Many of the providers denied receiving

loans, claiming they had been paid for services. The center

has written off much of the money as unrecoverable.

The

auditors also found that the center's accounting staff was unable

even to keep a checkbook: Two identically numbered checks were

issued for different amounts to different people; checks marked

"void" by the center cleared the bank; other checks cleared

in amounts different from those noted in center records.

Last August, Munn blamed the problems on "inadequate staffing

. . . and poor training," and said "significant improvements

have taken place."

But finances have continued to deteriorate, with the center amassing a deficit of at least $900,000 for the fiscal year that ended in June. Many critics blame Munn. "When problems happen over and over and over, when does it

Last year, the state investigated a series of suspicious financial transactions between the center and a developer of homes for disabled people with serious medical needs.

In 1993, the center agreed to lend the developer $50,000. It then forgave the loan -- just before the developer contributed $50,000 to a fund for "staff and client programs"

at the center.

To department officials, the transaction looked like a scheme to convert $50,000 of state money to the personal use of management.

The developer and center Executive Director Dexter Henderson deny that was their intent. But the department's investigation turned up dozens of other questionable transactions -- including almost $200,000 in contributions

by the center to the developer and 10 other providers.

Ultimately, the department found no wrongdoing, though it ordered

the center to submit to closer monitoring and to recover the

$50,000.

Henderson blames any mistakes on his haste to develop the homes. He defends the center's financial practices.

"The facilities are up, they are brand new, we have clients

in them and we are receiving services," he says proudly. "It's

well worth the criticism we went through."

State officials learned of problems at the Stockton-based Valley Mountain Regional Center as early as 1991. But they failed to act before 1995,

PERSONNEL PROBLEMS

When regional centers tried to make ends meet by asking staff social workers to take on more clients and to take unpaid furloughs, labor conflicts flared.

In early 1996, more than 100 social workers at Valley Mountain called for the removal of center executives. And in a letter to Amundson, they charged that the

department's intervention in Valley Mountain's problems had come too late and was too weak.

In June 1996, staff at the Regional Center of the East Bay followed suit. In a blunt letter delivered to the center's board of directors, about 70

social workers declared that they had lost confidence in Director

Munn:

"Whether we are looking at gross fiscal mismanagement

of individual consumer and agency funds, deteriorating conditions

for the . . . staff of the agency, or the massive disruption

caused by the reorganization (of the agency), the result is

the same: Consumers will not receive the quality of service

that they deserve."

At North Bay Regional Center in Napa and at the Tri-Counties Regional Center in Carpinteria, near Santa Barbara, staffers have threatened to strike.

At the Orange County regional center, tensions escalated this spring

when a union organizer was fired from her case-manager job. When workers called a strike for mid-July, parents groups and disabled-service operators promised to join them on the picket lines. Just days before the walkout, a contract agreement was

reached.

The conflicts have a common theme: Huge caseloads and forced furloughs leave many social workers feeling that they don't have enough time to take care of their clients and to closely monitor their homes and programs. Frustration, low

pay and long hours lead to turnover, which leads to a diminished

quality of care.

At Orange County, about 60 experienced social workers have left the agency in the past two years -- and many of the replacements have been entry-level workers

who are sometimes paid less than $25,000 a year.

"When you burn out, you're just going through the motions, or you

quit," says Rhone, the East Bay union official. "It's a sad

statement to make, but it's what happens when people become

disillusioned."

And when they quit, Rhone says, 70 or 80 families may go unattended for more than a month before a new case manager takes over. An inexperienced case manager may be overwhelmed.

"It's nuts," Rhone says. "The whole system is nuts."

DISABLED PAY THE PRICE

Ultimately, critics say, the price for such disarray is paid by the disabled.

Many regional centers have tried to ease financial pressures by delaying crucial services to the disabled, or by denying them altogether.

As early as 1991, Amundson's department heard such complaints from families at San Andreas Regional Center, which provides services to 6,500 clients in Monterey, San Benito, Santa Cruz and Santa Clara counties.

The department warned the center that year that it was not providing adequate

care to clients. Still, the problems continued.

In 1995, a local oversight panel detailed dozens of cases in which San Andreas had delayed services, arbitrarily denied them and obstructed families' efforts to appeal.

Only then did Amundson intervene forcefully. First he threatened to end the state's contract with the agency. When San Andreas' executive director resigned

under pressure, Amundson dispatched a state team to run the center until it stabilized.

Today, the San Andreas center's performance is much improved. But those who deal with the center say that some families still run into arbitrary delays and denials.

A state investigation found the center had violated federal regulations by cutting care to infants without notice and without providing alternatives. And, investigators found, the center chronically missed federal deadlines for evaluating and treating infants and toddlers.

At South Central, San Andreas and other centers, critics cite a common pattern: Parents who know how to work the system often get what their children

need, while families who don't know the system -- many of them

low-income and minority families -- might not.

"We're talking large numbers of families, huge numbers -- hundreds,

easily," said one therapist, who asked to remain anonymous.

Regional centers also have been implicated in problems related

to the Wilson administration's transfer of severely disabled

patients from the state hospitals to community residences. The

centers have played a central role helping the state to meet

yearly transfer quotas, dispensing hundreds of millions of dollars

a year to pay for housing, medical care and other programs for

the patients.

But some families say the centers have pressured them to accept the transfers. Sometimes, they say, medical care and other services promised by the regional centers were never delivered -- and as a result, their children suffered serious health problems.

Group home owners say that regional centers have sent them former state hospital residents without informing them of the patient's history of sexual assault, fire-starting or other violent behavior disorders.

Watchdog groups say the regional centers have failed to properly check on clients after they're transferred, or to monitor the clients' homes

and programs.

Sonoma County education officials say that San Francisco-based Golden Gate Regional Center failed to assure that promised medical care and other essential services were provided to a 19-year-old man who was transferred in June 1996

from the Sonoma Developmental Center in Eldridge to a community

home in South San Francisco.

The man, severely disabled by cerebral palsy, was hospitalized several times after the transfer. In November, state inspectors cited the home for failure

to provide proper medical care and oversight.

Later the man was sent to a nursing home for the elderly. He died in May.

While the death may have been inevitable because of his condition,

the Sonoma officials say that failed oversight by the regional

center made his last year chaotic, painful and lonely.

"The impact of poor planning, limited monitoring, insufficient

training, inadequate coordination of services . . . and the

lack of adequate medical supervision had a disastrous impact,"

says Sonoma school nurse Ellie Held. "How does the regional

center allow this?"

In an interview last week, Golden Gate Director Julius Gaillard said he had never heard of the deficiencies discovered by state inspectors. And he insisted

that the man got the services he needed.

"We worked very hard to protect this boy and look after his welfare," Gaillard said. "In our opinion, this is not a case that should be used

to demonstrate that our system has been negligent."

Both the Association of Regional Center Administrators and the state

Department of Developmental Services deny that mismanagement

has caused breakdowns in care anywhere in the system.

Said Deputy Director Douglas G. Arnold: "The department believes

that negative impacts on consumer services have been avoided."

Golden Gate Regional Center generally has

a good reputation, and Gaillard joins others who insist that

the system should not be judged by its weakest links. But complaints

about the agencies have flowed into state legislative offices

this year, and a growing number of lawmakers believe the system

needs reform.

"If the 21 regional centers represent the backbone of the developmental disabilities system in California, that unfortunately constitutes a chiropractic nightmare," says Robert Cross, vice president of a state group called California Association of State Hospital Parent Councils for the Retarded.

At their founding in the mid-1960s, they were expected to coordinate close-to-home care and services for people with mental retardation, autism, cerebral palsy and other developmental disabilities. Today, 21 independent regional centers control a combined annual budget of nearly $1.1 billion.

The centers evaluate children and adults for possible developmental

disabilities and determine which of them are eligible for services.

For those who are eligible, the regional center pays other businesses

and agencies to provide an array of services from housing and

education to transportation and baby-sitting for parents with

disabled children.

HOW THE CALIFORNIA REGIONAL CENTER SYSTEM WORKS

California has a cradle-to-grave system of care and services for the developmentally disabled that is unique in the nation. The system is administered by 21 regional centers -- private, nonprofit agencies funded by state and federal tax dollars.

To understand how the system works, consider the case of Rosie B., a fictional character:

Rosie is born with Down syndrome. Hospital officials refer her mother

and father to their local regional center. After an evaluation,

the center confirms that she is eligible for services.

Under the direction of agency experts, Rosie is enrolled in

an infant development program. Perhaps her parents are referred

to special counselors who know the stresses of raising a developmentally

disabled child. As Rosie grows a bit older, she might be enrolled

in physical therapy and speech therapy. And the family's case

manager can arrange for "respite" services -- baby sitters

who specialize in kids like Rosie. Many of the services are

paid for by insurance, and for those that aren't, the regional

center may be able to help.

When Rosie turns 14, the regional center staff begins to prepare a plan that will guide her transition to adulthood. She will be eligible to remain in California's school system until she turns 22, but she may want job training,

therapy or other services arranged by the regional center.

As Rosie finishes her education, her regional center case

manager might help her find a work program designed for the

developmentally disabled. If she wants to live on her own, her

case manager may find a group home for her, or an apartment

that she would share with a roommate. The case manager also

may have a hand in arranging and paying for recreational activities.

If Rosie is on Supplemental Security Income, a federal aid

program, most of her monthly check would be paid to the group

home owner for room and board. The regional center would supplement

that payment with state and federal funds. If Rosie gets sick,

the bill would be paid by Medi-Cal, but the regional center

might help her find specialized medical care.

Every year, the regional center staff would work with Rosie to develop a